Despite Concerns, Utilities Are Open To Investing In Distributed Generation

Despite Concerns, Utilities Are Open To Investing In Distributed Generation

U.S. electric utilities are increasingly confident that distributed generation – that is, power assets with a capacity less than 20 megawatts – will grow significantly from today’s current levels. Furthermore, while many utilities see distributed generation as a potential threat to their business, they are quite open to considering investments in that space and related technologies.

These were some of the findings that came from the 2015 Strategic Directions: U.S. Electric Utility Industry report. Concerning distributed generation, approximately 5 percent of total U.S. power generation comes from this area, but more than half of respondents feel that margin could increase to six to 10 percent by 2020. This represents a significant increase over survey years 2013 and 2014, when the response came in at 43 percent.

Eighty percent of respondents say they believe that distributed generation, particularly solar photovoltaic (PV), represents a threat to their business. Almost two-thirds expect the impacts to be significant.

“In reality, many utilities are still in the ‘review stage’ when it comes to assessing how they will manage distributed generation,” said Ryan Pletka, Associate Vice President for Black & Veatch’s energy business. He noted how utilities are dealing with the issue of net metering. Nearly one-third of respondents are currently reviewing their policies internally or working to change net metering tariffs to account for the policies’ net costs and benefits.

While distributed generation may be viewed as a threat, that is not stopping utilities from being open to considering investments in the technology, Pletka said. Nearly 75 percent of respondents are open (“Yes” or “Maybe”) to investing in behind-the-meter and distributed grid infrastructure, and two-thirds say they will increase their renewable energy generation investments in the next five years.